i3 Energy PLC – Final Results for the year ended 31 December 2018

i3 Energy plc, an independent oil and gas company with assets and operations in the UK, is pleased to announce the audited results for the year ended 31 December 2018.  A copy of the Company’s financial statements will be posted to shareholders and made available shortly on the Company’s website at https://i3.energy together with a notice of AGM.  The AGM will be held at 11:00 am on 27^th June 2019 at WH Ireland, 24 Martin Lane, London, EC4R0DR.

HIGHLIGHTS

• Awarded sole ownership of 30^th Offshore Licensing Round Block 13/23c containing a material extension of the Liberator field referred to by i3 as Liberator West
• Block 13/23c added 22 MMBO of 2C Contingent Resources and 47 MMBO Mid-case Prospective Resources to i3’s previously held 11 MMBO of 2P Liberator Reserves, as independently verified by the Company’s Competent Person, AGR TRACS International Limited (“AGR”)
• Successfully completed placements raising £2.57m and £1.62m before expenses through the issue of new ordinary shares at a price of 30 pence and 1.05 pence per share, respectively, to fund Field Development Plan (“FDP”) engineering, trees and wellheads for the Liberator development, and general corporate purposes
• Deleveraged the Company’s balance sheet through the conversion of US$2.5m of existing loan notes held by James Caird Asset Management (“JCAM”) into 5,220,580 new ordinary shares at an average conversion price of US$0.48 per share
• Focused on defining an enlarged FDP following the award of Liberator West:
• Redefined expected Liberator Phase I work programme to include 2 development wells in addition to the Company’s commitment to appraise Liberator West
• Worked with the supply chain on development design and engineering
• Conducted internal and third-party reservoir simulations to optimize and de-risk well locations and trajectories
• Continued sourcing long-lead equipment and services in advance of i3’s expected 2019 development and appraisal drilling programme
• Commissioned and completed feasibility and engineering studies for the tie-in of the planned Liberator production wells to the Bleo Holm floating production storage and offloading (“FPSO”)
• Contracted Gardline Limited to conduct a site survey at its Liberator field
• Appointed Majid Shafiq as MD & CEO and Neill Carson (previous CEO and co-founder) as Non-Executive Director

Post Period and Outlook

On 10 January 2019 the Company provided an operational and funding update and announced that it had entered into a letter of intent with Dolphin Drilling Limited for a three-well appraisal and development drilling programme to be conducted in the summer of 2019.  The Company also announced that it had received indicative terms from Repsol Sinopec Resources UK Limited (“RSRUK”) for Liberator’s use of their leased Bleo Holm FPSO facility via Ross field infrastructure, and that the parties were working together to agree the terms for Liberator Phase I construction and tie-in, and transportation, processing and operating services agreements. These agreements are expected to be finalized alongside the 2019 field development plan approval by the UK Oil and Gas Authority (“OGA”).  The Company also continued to progress its previously announced joint venture farmout process. It also continued negotiations with senior and junior lenders for the provision of loan facilities of between US$100 and US$130 million, of which up to 25% was expected to be available towards i3’s planned 2019 drilling programme, with the balance drawable for the residual 2019/2020 Liberator Phase I production wells, subsea installation and field tie-in.  The Company estimated its 2019 drilling campaign to cost c.US$41 million with additional capex to 2020 first oil of c.US$90 million, inclusive of contingency.

On 25 February 2019 the Company announced that it had entered into a term sheet which sets out the terms and conditions of a £24mm junior secured loan note facility with warrants.  A European Investment Manager with assets under management in excess of £1 billion agreed to subscribe for £12 million of the Loan Notes and, based on offers received, the remainder of the Loan Notes were expected to be issued to one or more syndicate members and/or offtake providers who are also potential lenders in i3’s senior debt facility which was under negotiation to provide US$100 million towards the Company’s Liberator oil development.

On 12 March 2019 the Company announced its intention to issue new ordinary shares of £0.0001 each in the Company via an accelerated bookbuild (“Bookbuild”) to raise in aggregate gross proceeds of not less than £16 million (“Placing”) at a price of 37 pence per share (“Placing Price”).  It was intended that the aggregate net proceeds of the Placing and the anticipated £24 million junior secured loan note facility with warrants, announced on 25 February 2019, would fund i3’s planned 2019 multi-well appraisal and development drilling programme at its 100% owned and operated Liberator oil field and Serenity prospect and its near-term working capital requirements.  The programme was expected to commence as early as June 2019 and was targeting STOIIPs of 314 and 197 million barrels at the Liberator field and Serenity prospect respectively.

On 12 March 2019 the Company announced that further to the Placing Announcement earlier in the day, the Bookbuild had been successful and was closed.  The Company had successfully placed 43,243,243 Ordinary Shares at an Issue Price of 37 pence per share, raising gross proceeds of £16 million.

On 19 March 2019 the Company announced that it had posted a circular to shareholders regarding an Open Offer to raise up to £2 million of additional funds for the Company, as announced 12 March 2019.

On 22 March 2019 the Company announced that it had contracted Gardline Limited to conduct a site survey for its 2019 and 2020 drilling program plus the pipeline route for its Liberator Phase I development.  The Company also announced that all outstanding convertible loan notes totalling approximately £433,153 in principal would be repaid with interest in accordance with the terms on the maturity date of 31 March 2019.  In addition, the Company announced that i3’s management and Board, in addition to the previously announced purchase of 678,645 shares by i3’s Directors in the Placing announced 12 March, would be purchasing a further 2,131,538 ordinary shares in the Company at a price of 37 pence, totalling £788,669, alongside the Open Offer and conditional upon the completion of the Placing.  The Company further announced that it had issued a total of 5,920,000 share options, granted conditionally upon the completion of the Placing as announced on 12 March, to Directors and key management in accordance with the rules of the Company’s Share Option Plan.  The issue of Options to Directors is a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies.

On 4 April 2019 the Company announced that the Open Offer to shareholders as announced on 19^th March 2019 had closed for acceptances in accordance with its terms.  The Company had received valid applications in respect of a total of 983,059 new ordinary shares in the Company.  The aggregate amount raised pursuant to the Open Offer was approximately £363,732.

On 9 April 2019 the Company announced that it had executed a contract with Dolphin Drilling Limited (“Dolphin) to utilize the Borgland Dolphin semi-submersible drilling rig for a 94-day programme which is due to commence between 15 July and 15 August 2019.  The drilling commencement window was agreed by the Company and Dolphin to ensure the availability of necessary equipment and to provide adequate preparation time to crew and mobilise the rig from its current mooring location in Norway.  In addition to contracting the Borgland Dolphin, i3 secured the necessary wellheads and conductor pipe for mid-July delivery to align with the start of its field operations and spud of the A3 appraisal well.  The Company also provided an update on its site survey operation which was conducted using the Gardline vessel ‘Ocean Observer’ at the Company’s drilling locations and along the potential pipeline route from Liberator to the intended host facility.  The operations were completed and were conducted without incident.  Sufficient data had been acquired to allow the Company to proceed with permitting of the 2019 drilling programme and with engineering design for the Liberator Phase I development works.

On 30 May 2019 the Company announced that it had entered into binding terms with funds managed by Lombard Odier Asset Management (Europe) Limited for a £3mm participation in the junior loan note facility, the proposed terms of which were announced by the Company on 25th February 2019, (the “Junior Facility” or “Loan Notes”), a £2mm placing of new ordinary shares priced at 37p per share and associated warrants to subscribe for new ordinary shares (collectively the “Lombard Odier Investment”). The closing of the Lombard Odier Investment was conditional, inter alia, on the closing of the Junior Facility. In light of Lombard Odier’s further £2mm equity investment, it was intended that the Junior Facility be downsized from the £24mm previously indicated to £22mm, and the closing of that facility will be the subject of a further announcement.

The Company’s focus for the remainder of 2019 will be on 3 key areas:

1. Continued advancement of a safe and economically robust Liberator development with targeted first oil in 2020.
2. Secure sufficient funding to conduct the Company’s 2019 drilling and 2020 development initiatives.
3. Complete 2019 drilling campaign at Liberator, Liberator West and Serenity.

The Company continuously evaluates opportunities to strengthen its balance sheet whilst maintaining tight control of its costs and working capital position.

Majid Shafiq, CEO of i3 Energy plc, commented:

“2018 was a transformational year for i3 Energy as we significantly expanded our asset base and positioned ourselves to conduct, subject to the finalising of financing facilities, what is hopefully a game changing drilling program in 2019. The award of Block 13/23c in the 30^th Licensing Round resulted in a material increase in our reserves and resources base, not only in the Liberator field in what we believe is a low risk field extension but also in the significant Serenity prospect, which similar to Liberator, we map as an extension to an existing discovery. Our team has conducted extensive subsurface technical studies and analysis to improve our understanding of these assets and so mitigate risk as we move towards drilling Liberator and Serenity this summer. We were also delighted to receive continued support from our shareholders and new investors as we conducted a couple of small equity placings in 2018 to fund engineering studies, long lead items and the site survey of our drilling locations and export pipeline route, which we completed in April 2019. Post the reporting period, we made significant progress on a number of fronts as we continued to move the Liberator development towards FID; entering into a drilling contract with Dolphin Drilling to drill development and appraisal wells on Liberator and Serenity, progressing discussions with RSRUK for transportation and processing Liberator crude through the Bleo Holm FPSO and advanced our FDP documentation with the OGA. We were very pleased to receive strong support from existing and new shareholders as we completed a significant equity placing for £16mm to part fund our 2019 drilling programme and have made good progress towards funding the balance of the drilling capex through the issue of loan notes to a consortium of sophisticated financial investors.

After over two years of hard work we look forward to completing our junior loan note facility and to an exciting summer drilling program which we hope will ultimately transform our company into one of the more significant oil producers in the UKCS.”